S. Korean Brings Internet to North

Despite political hurdles on both sides of the border, businessman Kim Beom Hoon has a Pyongyang cyber-cafe and plans to expand.

SEOUL — Its people lack food. Prices are soaring. Electricity is scarce, and the rest of the world is alarmed by its murky nuclear ambitions.

What North Korea needs in these difficult, troubling times, says Kim Beom Hoon, is simple: the Internet.

Kim, a successful South Korean businessman, is on a quest to bring cyberspace to the isolated North, a country where the basic infrastructure is barely functioning, let alone able to support construction of an information superhighway.

But against all probability, and despite run-ins with South Korean authorities suspicious of his activities, Kim has managed to push ahead with what might seem an impossible dream.

Nine months ago, he opened North Korea's first Internet cafe, in downtown Pyongyang, complete with high-speed connections and attendants serving free drinks.

Forget, for now, that the facility is frequented only by foreigners, the diplomats and journalists and aid workers who were starved for a place where they could send e-mail back home and hear news from the outside world.

And forget that the cost of logging on, at $10 an hour, is a princely sum to most North Koreans, who earn less than $50 a month and can hardly afford to eat.

"Beginning is half done," says Kim of his new venture, although he acknowledges that it has yet to make a cent.

Still, he harbors visions of grandeur, of an explosion in Internet access that will one day revitalize North Korea's basket-case economy and even, Kim says earnestly, pave the way for eventual reunification between the two Koreas.

If there is any logic to bringing the world of super connectivity to so hermetic and poor a place as communist North Korea, it makes sense that the South would be the country to do it.

Not just because of its proximity -- across a heavily armed border -- but because South Korea is one of the most wired nations on Earth, where the Internet reaches 70% of the populace.

Around Seoul, Internet cafes, known as "PC bangs," are as ubiquitous as Starbucks in the U.S., low-cost hangouts where young people gather to play networked video games or just surf the Web.

Kim's PC bang in central Pyongyang made its debut in May, on the ground floor of a nondescript three-story building owned by his North Korean partner, Jangsaeng Trading Co. The facility boasts several state-of-the-art computers.

It wasn't the primary aim of Kim's firm, Hoonnet.com, to set up an Internet cafe in the North Korean capital.

"If you say you're going to North Korea to open a PC bang, people will think you're crazy," Kim says.

But it seemed a logical byproduct of the original Internet business that he went to establish, which might sound even more ridiculous in poverty-stricken North Korea: an online lottery, the kind that Kim's company had already developed in the South.

Kim says that the online lottery is aimed not at North Koreans -- most of whom don't have computers -- but at international gamblers, who can log on to the Web site from anywhere in the world with the click of a mouse.

It took Kim more than a dozen trips to China to meet with North Korean officials before he finally sealed a deal. Under the agreement, Jangsaeng, a state-owned entity, put up $1 million and Hoonnet.com $200,000.

For North Korea, the deal was part of an effort to carve a niche in the international high-tech arena, to market itself as an unlikely magnet for investment in information technology.

This is the same country where hundreds of thousands of people are believed to have died of starvation a few years ago.

Yet the computer software industry is one in which North Korea is known to excel.

"There are a lot of bright people there. They've developed quite a lot of software that could be sold on the world market," says Jean-Jacques Grauhar, who spent seven years in Pyongyang as a business consultant. He is now secretary-general of the EU Chamber of Commerce in Seoul. "What they need are better business networks to go to the outside."

Even more important in North Korea's Stalinist system, the high-tech industry has the backing of leader Kim Jong Il, who is rumored to be something of a computer junkie.

"It is not North Korea that's closed to the Internet," says entrepreneur Kim. "It's international opinion, dogma and prejudice that says that North Korea is not open to the Internet."

So he seized on the opportunity and scored a victory when the government in Seoul, which must approve all contacts between North and South, gave the initial go-ahead.

But in the highly charged political atmosphere between the Koreas, things are rarely straightforward.

The South Korean government eventually retracted its permission, saying that Kim -- who was already in Pyongyang setting up shop -- hadn't secured the proper approvals for a gambling business. For its part, Pyongyang refused to let Kim back out after it had already invested $1 million; it barred him from leaving the country for several months.